Federal Reserve Chair Jerome Powell is set to reaffirm his stance that there’s no need to reduce interest rates imminently, following the release of fresh inflation data that indicated continuing price pressures. Powell’s semiannual monetary policy testimony before Congress is scheduled for March 2 and 3.
According to a Bloomberg report, the latest inflation data will likely reinforce Powell’s stance during his appearance on Capitol Hill (Reference 1). The US producer price index rose 0.6% in February, while the consumer price index increased by 0.4%. Both readings were above market expectations, signaling that inflation remains a concern.
The persistent inflation pressures come amid ongoing economic expansion in the United States, which has prompted the Federal Reserve and most of its members to express patience regarding potential rate cuts. Powell’s upcoming testimony before the House Financial Services Committee and the Senate Banking, Housing, and Urban Affairs Committee is expected to further emphasize this viewpoint.
LiveMint also reported that Powell is anticipated to maintain his ‘no rush to cut’ message during his Congressional testimony (Reference 2). The US economy continues to exhibit underlying strength, with a solid labor market and healthy consumer spending. This, in turn, reduces the urgency for the Federal Reserve to lower interest rates.
Apart from the Federal Reserve, other major central banks, including the European Central Bank (ECB) and the Bank of Canada, are predicted to keep their interest rates unchanged during their upcoming meetings (Reference 3). This consensus among central banks reflects a generally positive global economic outlook and a preference for maintaining current monetary policies.
1. Bloomberg Fed’s Powell
2. “After fresh inflation data, Fed chief Jerome Powell to double down on ‘no rush to cut’ message,” LiveMint, March 2, 2024. [
3. “February jobs report and Powell’s semi-annual testimony: What to know this week,” Yahoo Finance, March 2, 2024. [
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